Powers to hear evidence in secret in civil courts will not be extended to inquests and will only be allowed in the interest of national security, the Justice Secretary has said.
Ken Clarke admitted that controversial government proposals to allow sensitive information to be heard in private in all civil settings, including coroner's courts, were "too broad".
Despite Clarke's climbdown, former director of public prosecutions Lord Ken Macdonald said the bill still contained elements that were "offensive" to the idea of fair justice.
He told BBC Radio 4's Today programme: "I think the bill still contains much that is offensive to our traditional notions of equal parties adjudicating cases in front of an impartial judge and I think we still need to look very closely at it.”
"I think it’s pretty clear that if this bill had been enforced at the time of the Binyam Mohamed for example, a good deal of the material that was litigated there in open court would have been litigated in secret..
"We simply wouldn’t have discovered many of the things we did discover – in other words that Mr Mohamed had been tortured and that the British agencies got a bit closer to unlawful rendition practices than we would have wished them to do so."
The Justice and Security Bill, due to be published by the Ministry of Defence on Tuesday, has been watered down and will dictate that sensitive evidence will only be heard in secret if national security is deemed to be threatened.
The powers will not be extended to inquests and judges will make the final decision on whether proceedings are held behind closed doors.
Ken Clarke's plans mean the Binyam Mohamed case would have been heard in secret
The changes come after the government carried out a consultation exercise on the original plans, which were heavily criticised by civil rights campaigners, MPs and lawyers.
Speaking on Tuesday morning, Clarke told BBC Radio 4's Today programme: "What I’ve done is clarify what I’ve always argued, that this applies to spies and national intelligence.
"No country in the world allows them to give evidence in court; you’d have terrorists in the public gallery, lining up making notes."
The justice secretary admitted, however, the plans were "less than perfect." “Of course it’s going to be less than perfect, but at the moment the alternative is silence.
"You either have the judge hearing the evidence in closed material proceedings or what happens at the moment is this evidence is never given at all. Sometimes you have the agencies and the Government having to pay out millions of pounds to settle a claim which the agencies are still saying is unfounded, but we can’t call the evidence to prove it.”
The way in which the intelligence and security services are overseen will also be overhauled under the new Bill, with Parliament electing which MPs and peers sit on the Intelligence and Security Committee.
Ken Clarke said the plans were 'less than perfect'
Its members are currently appointed by the Prime Minister.
Shami Chakrabarti, director of Liberty, said: "The oldest parliamentary trick is to start with a policy so outrageous that any crumb of comfort looks half-reasonable.
"The protection of inquests is that crumb, but what if grieving families and other victims want to sue the military, intelligence or political establishment for abuses of power?
"We've all seen fig leaves like 'judicial triggers' and 'exceptional circumstances' before.
"They give little comfort to the claimant locked out of court while government lawyers play to an open goal in private with the judge."